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For businesses looking to benefit from a fast-growing economy within the European continent, Bosnia and Herzegovina presents a golden opportunity. Being the centre of South-East Europe, the Western Balkan country is quickly becoming a preferred choice for many foreign businesses to consider as an address for their operations.

Located between the Danube River and the Adriatic Sea, this heart-shaped country represents a bridge between the east and west, a crossroad of civilisations, cultures, and trade. This geopolitical position has, through the years, made Bosnia and Herzegovina a multicultural, multilingual, and diverse jewel with an authentic European cultural identity. The country is renowned for its strong trade history and has long had a diverse population.

A transitional economy with enormous potential:

Bosnia and Herzegovina might be undergoing a transitional economy, but it is firmly striving toward European Integration, demonstrating a strong potential to attract foreign direct investment across various sectors.

As a small, open economy, Bosnia and Herzegovina has many opportunities — its proximity to the European market, a well-educated labour force, and export potential in both goods and services. The country has important export opportunities across many sectors, including wood processing, metal and automotive industries, tourism and information technologies. Agriculture is also a sector with strong potential, with the intent to move from small-scale and subsistence agriculture to an industry that can be competitive in an international arena.

The country’s natural wealth, combined with its technical resources, makes it an absolute treasure trove of investment potential, especially given its excellent location, wide range of resources, and its fertile land with rivers, forests, and mountains. Key industries with excellent investment potential include agriculture and food processing, forestry, wood, and metal processing, automotive parts and manufacturing, tourism and pharmaceutical.

What is the economy like?

Bosnia and Herzegovina is home to an active international community, fast embracing reforms to improve the business climate as the country pursues European Union membership.  Simultaneously the nation is actively pursuing World Trade Organization membership.

The country is open to foreign investment and offers a liberal trade regime, and its simplified tax structure is one of the most liberal in the region and Europe.

The full convertibility of the national currency, the convertible mark against the Euro, is guaranteed through the Currency Board Arrangement of the Central Bank of Bosnia and Herzegovina, which has significant implications for investors and the business community. What’s more, investors and the business community can count on the absence of inflation shocks due to excessively expansionary monetary policy. Also, due to the fixed exchange rate, the foreign exchange risk is significantly lower.

According to data from 2019, the volume of trade between the Balkan nation and the UAE amounted to about AED 130 million. The country exports various products to the UAE, ranging from processed wood, processed oil by length, petroleum oils, and other oils obtained from bituminous minerals to military weapons and ammunition. The businesses from the country participate in International Defence Exhibition and Conference (IDEX) in the UAE on regular bases, presenting ample business opportunities for improving the bilateral relationship.

What’s in it for investors?

A significant part of Bosnia and Herzegovina, 51.3%, is agricultural land, which, in addition to the favourable climate, makes it a country that produces fruits and vegetables. It is highly positioned when it comes to world agricultural production; in terms of growing raspberries, for example, it is ranked 10th in the world, 15th in the world for plums, and 35th for strawberries.

Over 63% of Bosnia and Herzegovina is covered with forests, offering a wide range of resources for various industries, from sustainable forestry and wood industry to construction. Due to the specific potential to provide raw materials and semi-finished products on an annual, sustainable basis, over 60% of the country’s wood production is exported.

Automobiles and other sectors have a good presence

Porche, Mercedes, Volkswagen, MAN, Skoda, Toyota, Mazda, Renault, and Peugeot are just some of the major car brands that have been relying on Bosnia and Herzegovina’s professional workforce for decades. By investing in the automotive industry, the country has allowed companies to experience dynamic development, reaching international standards and achieving an average export rate of 90% to 30 countries, providing services to many global brands.

Fast-growing IT companies from Bosnia and Herzegovina have an annual income of about 200 million Euros and work for the world’s most famous companies, creating some of the most famous products and software solutions for the global IT market. What is particularly attractive is that through strategic investments, this sector can employ an additional 6,000 people and make a contribution to the nation’s GDP reaching upto 500 million Euros.

Major international companies with offices in Bosnia and Herzegovina include multinational companies and market leaders in their respective sectors, such as Coca-Cola, Microsoft, Cisco, Oracle, Pfizer, McDonald’s, Marriott, Caterpillar, Johnson & Johnson, FedEx, UPS, Philip Morris, KPMG, PwC, and others.  Nonetheless, the country offers business opportunities to well-prepared and persistent exporters and investors.

The untapped potential of tourism:

Tourism is one of the fastest-growing industries in Bosnia and Herzegovina. The country is recognised as one of the ten countries that record a significant increase in incoming tourism. Its natural resources and ecological diversity, as well as mountains, rivers and forests, form a strong basis for the development of outdoor tourism and other investment opportunities. Hidden gems are waiting to be discovered like the towns of Mostar, Počitelj or Stolac, or the Old Town of Sarajevo.

One of the most exclusive resources that Bosnia and Herzegovina has is its growing talent pool of young, highly-skilled, multilingual professionals who are extremely skilled and hardworking, attracting an increasing number of foreign investors.

Bosnia and Herzegovina is the place where people are transforming dreams and aspirations into the realities of tomorrow — it is a haven for businesses to flourish.

Source: Cicero and Bernay